Dictionary

 

Tax Law

A means by which governments finance their expenditure by imposing charges on citizens and corporate entities. Governments use taxation to encourage or discourage certain economic decisions. For example, reduction in taxable personal (or household) income by the amount paid as interest on home mortgage loans results in greater construction activity, and generates more jobs

Keywords

Arm's Length

A transaction or relationship where there is an absence of control the one over the other

Capital Asset

A designation of an asset so that profit or loss can be tracked for tax purposes; generally, all and any asset belonging to a tax-payer except those specifically excluded

Capital Expenditure

A once and for all expense to provide an enduring benefit to a capital asset

Capital Gain

The eventual, net proceeds of sale of an asset, subtracting the original purchase price from the sale price

Capital Loss

The amount of monies lost when disposing of an asset, the difference between the higher purchase cost and the subsequent but lower amount received when the asset was sold

Depreciation

An accounting procedure in which the cost or other recorded value of a fixed asset less estimated residual value (if any) is distributed over its estimated useful life in a systematic and rational manner

Economic Activity

The production, distribution, and consumption of commodities

Employee

A person who has agreed by contract to perform specified services for another, the employer, in exchange for money

Fair Market Value

The hypothetical most probable price that could be obtained for a property by average, informed purchasers

Income Tax

A mandatory payment imposed on residents of a pro rated portion of their income as a contribution towards the costs of government services.

Independent Contractor

A person hired by another not as an employee but, rather, pursuant to a contract for service where the engaging party does not supervise or control the detail of the work, and where the party engaged remains self-employed 

Personal Living Expenses

Expenses reasonably necessary to maintain health and well-being, to enjoy life's activities, and the capacity to earn money

Personal Services Contract

A contract in which the skills or talents of a party are material

Personal Use

Non-business use

Straight-line Depreciation

A depreciation formula which writes off the cost of an asset at a fixed percentage rate every year of an asset's useful life

Tax

A payment to a public authority, required by statute, for a public purpose

Tax Amnesty

An opportunity afforded to a tax payer to rectify errors or omissions in past tax years or returns.

Tax Avoidance

To avoid taxes by arranging one's affairs so as not to incur tax

Tax Evasion

A prohibited or illegal act or omission which is designed to reduce a person’s tax liability

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